Jonathan Rauch on the Individual Mandate Case

In general, I am a big fan of the work of columnist Jonathan Rauch. Unfortunately, his recent column on the individual mandate case is not one of his better pieces. The problem is not that he comes down on what I think is the wrong side of the issue, but that some of his points are factually inaccurate, while others ignore major counterarguments. Rauch claims that “no one disputes that the so-called mandate would be constitutional if you relabeled it as a tax,” that the case against the mandate is inconsistent with “conservatives'” previous opposition to judicial “activism,” and that, if the Court strikes down the mandate it will lead to socialized medicine.

Rauch’s tax point is factually wrong. The opponents of the mandate have consistently argued that the mandate is a penalty, not a tax, for reasons that go beyond labeling. I summarize that argument here:

As recently as 1996, the Supreme Court reiterated the crucial distinction between a penalty and a tax. It ruled that “[a] tax is a pecuniary burden laid upon individuals or property for the purpose of supporting the Government,” while a penalty is “an exaction imposed by statute as punishment for an unlawful act” or – as in the case of the individual mandate – an unlawful omission. The individual mandate is a clear example of a penalty, where Congress requires people to purchase health insurance, and then punishes them with a fine if they fail to comply.

In September 2009, President Obama himself noted that “for us to say that you’ve got to take a responsibility to get health insurance is absolutely not a tax increase.” He was right. If the mandate qualifies as a tax merely because it punishes violators with a fine, then Congress could require Americans to do almost anything on pain of having to pay a fine if they refuse. It could use this power to force citizens to buy virtually any product, including broccoli, General Motors cars, or anything else.

Even if the individual mandate does somehow qualify as a tax, it is not one of the types of taxes that Congress is authorized to impose….

[T]he mandate is not a tariff, impost, income tax, or excise tax [;] it is either [an unconstitutional] direct tax or no tax at all.

The issue of labeling, however, is not just a minor technical detail. If, as many defenders of the mandate claim, the only constraint on the tax power is political accountability, then accurate labeling is important to ensuring that political accountability is effectively imposed. Had the supporters of the mandate labeled it a tax from the start, it very likely would not have passed.

UPDATE: I have chosen to ignore Rauch’s rhetorical pretense that he is channeling the views that the late Senator Ted Kennedy would hold if he were still alive. I think this is just a clever device to express Rauch’s own views on the case. However, I would be happy to post a correction if it turns out that Rauch really doesn’t agree with the claims made in the piece.

UPDATE #2: Jonathan Rauch has asked me to post the following response, which I am happy to do:

My phrase about the difference between a tax and a mandate being merely a question of labeling may have been too quick and dirty (excuse: I had only 700 words), but in the next sentence I chose my words carefully: “Conservatives insist the mandate is unconstitutional under the Commerce Clause, but they acknowledge that an effectively identical policy fits comfortably within the scope of Congress’s taxing power.” I believe this is accurate, and my recollection is that plaintiffs acknowledged the point in a colloquy with Justice Sotomayor.

Ilya’s phrase “ensuring that political accountability is effectively imposed,” being rendered in the passive voice, elides the important question of _who_ should be in the business of ensuring political accountability. Do conservatives really want to put courts in the business of nannying politicians, and constitutionalizing the results? If so, the Supreme Court is going to be spending a lot of time drawing congressional districts. My own view is that enforcing political hygiene (which really means enforcing someone’s preferences regarding political hygiene) is not consistent with judicial modesty and is not a wise role for courts to play.

There is indeed a jurisprudential case against the mandate. But I’d distinguish between jurisprudential or constitutional doctrine and judicial style. If someone believes in judicial modesty (and I grant that not all conservatives do—though the vast majority have claimed to), then that implies a style of judging which puts a thumb on the scales against overturning properly enacted statutes. Yes, even a restrained court could and arguably should overturn a statute that finds no home in the constitution as originally conceived and subsequently interpreted. But this is a case where the parties generally agree that, programatically, what Congress is doing with the mandate fits quite comfortably within the taxing power. (See above.)

That’s why I don’t think striking down the mandate is consistent with a judicial style of restraint. If the plaintiffs win and conservatives cheer, I think they’ll have planted their flag on the libertarian/conservative-interventionist side of things, and, for better and worse, we’ll be in for a battle of the activist courts.

Regarding the political fallout…Ilya may be right. But three words (or is it two?) inform my view that conservatives are playing with fire here: _Roe v. Wade_. Based on public opinion in 1973, I doubt many people foresaw a two-generation backlash that redefined the political landscape. Stay tuned.

I appreciate Jonathan’s response, and I certainly understand that points sometimes get oversimplified in a short op ed. Nonetheless, the bottom line here is that it is simply not true that either the anti-mandate plaintiffs or “conservative” opponents of the mandate in general agree that “an effectively identical policy” could be enacted under the Tax Clause. This is made very clear in the plaintiffs’ brief linked above. It is also made clear in Paul Clement’s exchange with Justice Sotomayor at the oral argument (pp. 59-60), where he emphasized that any tax imposed on people who fail to purchase health insurance would be an unconstitutional “direct tax,” because “the one thing I think the Framers would have clearly identified as a direct tax is a tax on not having something.” That doesn’t sound like a man who admits that Congress could use the tax power to enact an “effectively identical policy.”

The Court’s conservative justices has previously ruled that maintaining clarity for the sake of political accountability one reason for judicial enforcement of limits on congressional power (e.g. – in New York v. United States). There would be nothing new in applying the same idea in the mandate case.

It is perhaps true that people who believe in a very strong presumption of constitutionality for legislation might find it difficult to advocate striking down the mandate. But few if any of the leading opponents of the mandate have ever advocated such a super-strong presumption. Certainly not those of us who have argued for many years that the courts should strongly enforce constitutional limits on federal power. Moreover, even those conservatives who do believe in a strong presumption could reasonably conclude that that presumption is overcome if all the arguments in favor of the mandate lead to virtually unlimited federal power.

Finally, Jonathan’s analogy with Roe v. Wade overlooks the reality that the mandate is much more unpopular than the pro-life cause (polls show that some 40-45% of Americans describe themselves as “pro-life” on abortion and some 50-60% believe that abortion should be either illegal or legal “only in a few circumstances”), and that few of its supporters feel as strongly about it as pro-lifers do about abortion. Regardless, it is pretty clear that most pro-choicers and most liberals generally remain satisfied with the results of Roe, despite the conservative backlash it has generated. Very few liberals want Roe to be overruled. Conservatives are likely to be at least equally happy with the overall effects of a decision striking down the mandate. I myself am pro-choice, and I think that Roe has been a net benefit for our side of the issue; though I am very skeptical of the decision’s legal reasoning.

UPDATE #3: Jonathan has asked me to post this additional response:

Thanks again to Ilya. Our arguments are on the table, so I’ll confine this reply to a point regarding the factual record and my interpretation thereof.

Justice Sotomayor: “Why couldn’t we get a tax credit for having health insurance and saving the government from caring for us?”

Mr. Clement: “Well, I think it would depend a little bit on how it was formulated, but my concern would be — the constitutional concern would be that it would just be a disguised impermissible direct tax.”

Prodded by Ilya, I guess I could read Clement as saying that all tax credits and tax incentives—and there are more of them than anyone could count—are constititutionally suspect. I get a tax credit if I buy a Chevy Volt. That’s functionally identical to paying higher taxes if I don’t buy a Chevy Volt. Impermissible direct tax?

It just never occurred to me that Clement and the plaintiffs might be arguing that tax credits and exemptions are perforce constitutionally suspect, because that would be a breathtaking claim. It would potentially require the Supreme Court to examine and rewrite the whole tax code. I think it’s more reasonable and realistic to interpret the plaintiffs as acknowledging that some (many?) forms of tax incentive are constitutional, and that the tax credit suggested by Justice S could be structured so as to be among them.

If I did misread Clement, then, alas, the plaintiffs’ position is even more radical than I realized.

I think Clement’s position is clear from his later statement in the same exchange with Sotomayor that any “tax on not having something” is an unconstitutional “direct tax.” Jonathan is wrong, however, to assume that that implies that all tax credits are unconstitutional. A tax credit is a deduction from some preexisting tax, such as an income tax. If the preexisting tax is constitutional, the same goes for most tax credits that merely serve to lower it for some people. By contrast, the individual mandate is a free-standing fine imposed on people who fail to purchase health insurance. If it were a true tax credit for purchasing health insurance (one that goes beyond previous tax deductions for employer-provided health insurance), it would cost the federal government billions of dollars in income tax revenue – including, presumably, from people who could claim the credit because they already have health insurance. Congress could potentially enact an across-the-board income tax increase to offset the lost revenue. But that too would be very different from the policy that it actually chose, and would have been a political non-starter to boot.

UPDATE #4: I have slightly modified the last update in order to make it clearer.